En­ergy

Business Advantage Papua New Guinea - - Contents - By Kevin Mcquil­lan

PNG is heav­ily con­cen­trat­ing on hy­dropower projects to meet its en­ergy needs. Elec­tric­ity from the PNG LNG pro­ject may even­tu­ally power more than half Port Moresby’s re­quire­ments PNG Power is look­ing at some large po­ten­tial so­lar projects

Pa­pua New Guinea has a na­tional en­ergy strat­egy that mostly em­pha­sises the use of re­new­able sources. Con­struc­tion on three huge hy­dropower schemes is pro­posed, as part of the gov­ern­ment’s goal of in­creas­ing house­hold ac­cess to elec­tric­ity from cur­rently 12 per cent to 70 per cent by 2030, and to pro­vide a re­li­able elec­tric­ity sup­ply across the coun­try.

In ad­di­tion, so­lar power, LNG and biomass en­ergy pro­duc­tion projects are be­ing de­vel­oped.

By far the big­gest prospec­tive pro­ject is an 1800 megawatt (MW) dam pro­ject at Karimui, Chimbu Province. This US$2 bil­lion pro­ject will take six years to build, with the work to be car­ried out by the Ital­ian com­pany Salini Im­pregilo.

An­other large hy­dro scheme is the Ramu 2 Hy­dro Power scheme, a 180 MW hy­dro-elec­tric power sta­tion on the Ramu River, in Kainantu in the East­ern High­lands Province. This US$2 bil­lion (K5.97 bil­lion) scheme will lift elec­tric­ity gen­er­a­tion ca­pac­ity by 36 per cent ac­cord­ing to sources at Kumul Con­sol­i­dated Hold­ings (KCH), the state en­tity man­ag­ing the pro­ject. The pro­ject will op­er­ate under a pub­lic-pri­vate part­ner­ship (PPP) model, with China’s Si­no­hy­dro Cor­po­ra­tion Lim­ited and Shen­zhen En­ergy Group Co. Ltd awarded the con­tract to con­struct the pro­ject. Shen­zhen En­ergy’s Di­rec­tor Peng Haibin said it marked a new pe­riod of closer and deeper co­op­er­a­tion with PNG.

A third ma­jor hy­dropower pro­ject was launched in Cen­tral Province in Fe­bru­ary 2017. The Edevu Hy­dro Power Pro­ject is ex­pected to gen­er­ate 50 MW power to boost elec­tric­ity sup­ply to Port Moresby. PNG Power will then buy power from the Chi­nese com­pany, PNG Hy­dro De­vel­op­ment Ltd. It will also sup­ply power to vil­lages in the lo­cal area.

Pro­ject Man­ager, Charles Gubei, says ne­go­ti­a­tions on the pro­ject be­gan in 2009 and it has taken eight years to get to

this stage. The ma­jor fund­ing of the K630 mil­lion has come from the Hu­nan Provin­cial Gov­ern­ment of China, and AG In­vest­ment.

Hy­dropower is re­plac­ing high-cost diesel gen­er­a­tion in smaller cen­tres too. PNG For­est Prod­ucts has three hy­dropower sta­tions at Baiune in Morobe Province, with a com­bined in­stalled ca­pac­ity of 15 MW, while state util­ity PNG Power Ltd (PPL) is con­struct­ing a new 3 MW Divune hy­dro­elec­tric pro­ject in Oro Province. Power from this site will feed the provin­cial cap­i­tal, Po­pon­detta, and the tourist town of Kokoda.

Biomass power

PNG Biomass, which is wholly owned by Oil Search has en­tered the Front End En­gi­neer­ing and De­sign (FEED) phase of the pro­posed Markham Val­ley Biomass Pro­ject.

The pro­ject in­volves us­ing wood­chips that are sourced pri­mar­ily from new in­dige­nous plan­ta­tion trees grown in the Markham Val­ley, which is lo­cated ap­prox­i­mately 55 km north-west of Lae. It will gen­er­ate up to 15 Mw—which may go up to 30 MW— of re­new­able, biomass-fired, base load power for the Ramu Power Grid.

The FEED stage process will re­fine the tech­ni­cal and com­mer­cial as­pects of the pro­ject, ahead of a fi­nal in­vest­ment de­ci­sion, which is ex­pected be­fore the end of 2017.

Gas

In 2015, PNG Power signed an agree­ment to buy LNG from Exxonmo­bil at half the cur­rent diesel rate to sup­ply the cap­i­tal, Port Moresby. The agree­ment is pro­duc­ing up to 25 MW of elec­tric­ity (about a fifth of Port Moresby’s re­quire­ments) com­ing from the PNG LNG plant. This is a five-year agree­ment that will lapse when the PNG LNG joint ven­ture needs the power for a third train.

At the end of 2016, Exxonmo­bil an­nounced plans to build an­other 50 MW power plant out­side Port Moresby. An­drew Barry, Man­ag­ing Di­rec­tor of Exxonmo­bil PNG, said the power plant will use gas from the PNG LNG pro­ject.

‘Upon com­ple­tion, the new plant will add enough power gen­er­a­tion ca­pac­ity to sup­ply 40 per cent of Port Moresby’s peak de­mand, help­ing to meet the na­tion’s grow­ing en­ergy needs us­ing a re­li­able and cleaner burn­ing source of en­ergy,’ he said.

Barry said the power plant will pro­vide ‘one of the most cost-ef­fec­tive sources of gen­er­a­tion for PNG Power ... we need to fo­cus on op­tions that can be scaled as de­mand in­creases, like the planned power pro­ject in Port Moresby. It has been de­signed such that it can be ex­panded to a to­tal of 200 MW, as re­quired.’ Barry added that only ‘rel­a­tively mi­nor in­vest­ments’ would be re­quired to match sup­ply and de­mand.

The ini­tial plan was for Exxonmo­bil to build the plant and turn it over to PNG Power, but a pri­vate-pub­lic part­ner­ship is now be­ing in­ves­ti­gated. Pos­si­ble in­ter­ested par­ties in­clude Kumul Con­sol­i­dated Hold­ings, PNG Power, Oil Search, Kumul Petroleum, ma­jor su­per funds and other in­vestors.

A 26 MW Gen­eral Elec­tric Gas Tur­bine gen­er­a­tor was in­stalled at the Lae Port in Jan­uary 2016. PNG Power also com­mis­sioned the Korean com­pany Dae­woo to build a heavy oil plant at Munum, just out­side Lae, which, when com­mis­sioned, is ex­pected to gen­er­ate a fur­ther 30 MW of power into the Ramu grid. A sec­ond trans­mis­sion line from the Ramu 1 power sta­tion to Lae, is also near­ing com­ple­tion.

So­lar

PNG has con­sid­er­able po­ten­tial for so­lar power, the cost of which is fall­ing quickly. In 2016, PNG Power signed a mem­o­ran­dum of un­der­stand­ing to work with the In­ter­na­tional Fi­nance Cor­po­ra­tion (IFC) to es­tab­lish a way for the pri­vate sec­tor to be­come in­volved in rooftop so­lar.

In 2017, PNG Power also signed a Mem­o­ran­dum of Un­der­stand­ing with the Cen­tral Provin­cial Gov­ern­ment and South Korean com­pany, K&P Lim­ited, to con­duct a fea­si­bil­ity study into the de­vel­op­ment of a 50 MW so­lar farm. If it goes ahead, the elec­tric­ity would be sup­plied into PNG Power’s Port Moresby sys­tem.

Rice sup­plier, Trukai In­dus­tries, has in­tro­duced a so­lar­pow­ered agro-pro­cess­ing ma­chine for small-scale rice pro­cess­ing in ru­ral ar­eas.

Rice De­vel­op­ment Man­ager, Humphrey Saese, says so­lar tech­nol­ogy does not need fre­quent main­te­nance, un­like diesel agro-machines. ‘It will be cheaper to use longer-term.’ 

UPON COM­PLE­TION, THE NEW PLANT WILL ADD ENOUGH POWER GEN­ER­A­TION CA­PAC­ITY TO SUP­PLY 40 PER CENT OF PORT MORESBY’S PEAK DE­MAND.

Pic­ture: Exxonmo­bil

Gas is now be­come part of PNG’S pow­er­gen­er­a­tion mix.

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